Question 1

If the preferred stock of a corporation is cumulative:

Accepted Answer

A)   Dividends on preferred stock are guaranteed.
B)   Dividends cannot be declared in an amount less than that stated on the stock certificate.
C)   Preferred stockholders participate in dividends paid in excess of a stated amount on the common shares.
D)   Dividends in arrears must be paid on preferred stock before any dividend can be paid on common stock.

Question 2

Topper Corporation has 60,000 shares of $1 par value common stock and 16,000 shares of cumulative 7%, $100 par preferred stock outstanding. Topper has not paid a dividend for the prior year. If Topper declares a $1.95 per share dividend this year, what will be the total amount they must pay their shareholders?

Accepted Answer

A)   $117,000.
B)   $341,000.
C)   $327,000.
D)   $177,000.

Question 3

A 2-for-1 stock split will:

Accepted Answer

A)   Increase the total par value of the stock and increase the number of shares outstanding.
B)   Decrease the total par value of the stock and increase the number of shares outstanding.
C)   Not change the total par value of the stock and increase the number of shares outstanding.
D)   Increase total stockholders' equity.

Question 4

A stock split will normally increase the market price of the stock and decrease the number of shares on the market.

Accepted Answer

A) True 
 B)False

Question 5

When a corporation fails to pay a dividend one year on its common stock, it is said to be "in arrears."

Accepted Answer

A) True 
 B)False

Question 6

Public corporations are required by law or regulation to perform all of the following except:

Accepted Answer

A)   Submit much of their financial information to the SEC for review.
B)   Make regularly scheduled dividend payments to all stockholders.
C)   Have their annual financial statements audited by an independent CPA.
D)   Disclose their financial information to the public.

Question 7

Which of the following most likely explains why a corporation's stock trades at a very high price-earnings ratio?

Accepted Answer

A)   Investors expect the corporation to have higher earnings in the future.
B)   The corporation pays a very low dividend on its stock.
C)   The corporation has several classes of stock outstanding.
D)   The corporation is large with very low risk.

Question 8

The number of shares a corporation may issue is specified in the articles of incorporation and approved by the Securities and Exchange Commission.

Accepted Answer

A) True 
 B)False

Question 9

Stock splits
Bainbridge Corporation recently patented an extraordinary invention that will allow average homeowners to cheaply generate a large fraction of the electricity consumed in their houses. As a result, the market price of Bainbridge's common stock has soared to $160 per share. Bainbridge is about to announce a 4 for 1 stock split. Explain why the company would take this action?

Accepted Answer

The purpose of a stock split is to bring...

Question 10

Which of the following best describes the book value of a share of stock?

Accepted Answer

A)   Net assets divided by the number of shares outstanding.
B)   The amount at which the stock would sell on the market if sold by a willing and informed seller to a willing and informed buyer.
C)   Total assets of the company, as reported in the accounting records, divided by the number of shares of stock outstanding.
D)   Total stockholders' equity divided by the number of shares authorized.

Question 11

Which of the following does not appear in a corporate income statement?

Accepted Answer

A)   Gains and losses from treasury stock transactions.
B)   Income tax expense.
C)   The income or loss from a segment of the business that has been discontinued during the current year.
D)   Gains and losses not expected to recur in the foreseeable future.

Question 12

If a corporation has issued a single class of stock, it must be:

Accepted Answer

A)   Common Stock.
B)   Preferred Stock.
C)   Stock issued at Par-value.
D)   Cumulative preferred Stock.

Question 13

Refer to the information above. How many shares of preferred stock are outstanding?

Accepted Answer

A)   32,400 shares.
B)   5,400 shares.
C)   10,000 shares.
D)   The number of shares cannot be determined without more information.

Question 14

Refer to the information above. If Vision did not pay a dividend for the last two years, but declared a dividend this year, how much will they have to declare in order for the common stockholders to receive $.45 per share?

Accepted Answer

A)   $189,000.
B)   $306,000.
C)   $108,000.
D)   $162,000.

Question 15

Shares that have been sold and are in the hands of stockholders are called:

Accepted Answer

A)   Outstanding.
B)   Issued.
C)   Treasury.
D)   Underwritten.

Question 16

Refer to the information above. The reacquisition of the 2,000 shares on April 1, 2011, causes:

Accepted Answer

A)   No change in total assets of Jetter Corporation.
B)   No change in the number of shares of Jetter Corporation stock outstanding.
C)   A reduction in total assets and in total stockholders' equity of Jetter Corporation.
D)   Jetter Corporation to show a new asset, "Treasury Stock", for $120,000.

Question 17

By going public a corporation can raise equity capital from many investors.

Accepted Answer

A) True 
 B)False

Question 18

Which of the following best describes retained earnings?

Accepted Answer

A)   Cash available for dividends.
B)   The amount initially invested in the business by stockholders.
C)   Cash available for expansion and growth.
D)   Income that has been reinvested in the business rather than distributed as dividends to stockholders.

Question 19

The average issue price per share of Revere's preferred stock was:

Accepted Answer

A)   $117.
B)   $100.
C)   $110.
D)   $34.50.

Question 20

In a corporation's organization chart, which is the highest position?

Accepted Answer

A)   Stockholders.
B)   Board of directors.
C)   CEO.
D)   President.

Exam 11: Stockholders Equity: Paid-In Capital

Public corporations are required by law or regulation to perform all of the following except:

Correct Answer
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A 2-for-1 stock split will:

Correct Answer
verified

Which of the following most likely explains why a corporation's stock trades at a very high price-earnings ratio?

Correct Answer
verified

The average issue price per share of Revere's preferred stock was:

Correct Answer
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Refer to the information above. How many shares of preferred stock are outstanding?

Correct Answer
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Which of the following best describes the book value of a share of stock?

Correct Answer
verified

In a corporation's organization chart, which is the highest position?

Correct Answer
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When a corporation fails to pay a dividend one year on its common stock, it is said to be "in arrears."

Correct Answer
verified

Shares that have been sold and are in the hands of stockholders are called:

Correct Answer
verified

A stock split will normally increase the market price of the stock and decrease the number of shares on the market.

Correct Answer
verified

If a corporation has issued a single class of stock, it must be:

Correct Answer
verified

By going public a corporation can raise equity capital from many investors.

Correct Answer
verified

Which of the following does not appear in a corporate income statement?

Correct Answer
verified

Correct Answer
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The purpose of a stock split is to bring...
View Answer

Correct Answer
verified

Which of the following best describes retained earnings?

Correct Answer
verified

If the preferred stock of a corporation is cumulative:

Correct Answer
verified

The number of shares a corporation may issue is specified in the articles of incorporation and approved by the Securities and Exchange Commission.

Correct Answer
verified

Refer to the information above. The reacquisition of the 2,000 shares on April 1, 2011, causes:

Correct Answer
verified

Refer to the information above. If Vision did not pay a dividend for the last two years, but declared a dividend this year, how much will they have to declare in order for the common stockholders to receive $.45 per share?

Correct Answer
verified

Exam 11: Stockholders Equity: Paid-In Capital

Public corporations are required by law or regulation to perform all of the following except:

Correct AnswerverifiedShow Answer

A 2-for-1 stock split will:

Correct AnswerverifiedShow Answer

Which of the following most likely explains why a corporation's stock trades at a very high price-earnings ratio?

Correct AnswerverifiedShow Answer

The average issue price per share of Revere's preferred stock was:

Correct AnswerverifiedShow Answer

Refer to the information above. How many shares of preferred stock are outstanding?

Correct AnswerverifiedShow Answer

Which of the following best describes the book value of a share of stock?

Correct AnswerverifiedShow Answer

In a corporation's organization chart, which is the highest position?

Correct AnswerverifiedShow Answer

When a corporation fails to pay a dividend one year on its common stock, it is said to be "in arrears."

Correct AnswerverifiedShow Answer

Shares that have been sold and are in the hands of stockholders are called:

Correct AnswerverifiedShow Answer

A stock split will normally increase the market price of the stock and decrease the number of shares on the market.

Correct AnswerverifiedShow Answer

If a corporation has issued a single class of stock, it must be:

Correct AnswerverifiedShow Answer

By going public a corporation can raise equity capital from many investors.

Correct AnswerverifiedShow Answer

Which of the following does not appear in a corporate income statement?

Correct AnswerverifiedShow Answer

Correct AnswerverifiedThe purpose of a stock split is to bring...View AnswerShow Answer

Correct AnswerverifiedShow Answer

Which of the following best describes retained earnings?

Correct AnswerverifiedShow Answer

If the preferred stock of a corporation is cumulative:

Correct AnswerverifiedShow Answer

The number of shares a corporation may issue is specified in the articles of incorporation and approved by the Securities and Exchange Commission.

Correct AnswerverifiedShow Answer

Refer to the information above. The reacquisition of the 2,000 shares on April 1, 2011, causes:

Correct AnswerverifiedShow Answer

Refer to the information above. If Vision did not pay a dividend for the last two years, but declared a dividend this year, how much will they have to declare in order for the common stockholders to receive $.45 per share?

Correct AnswerverifiedShow Answer

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Correct Answer
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Correct Answer
verified
The purpose of a stock split is to bring...
View Answer

Correct Answer
verified

Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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Correct Answer
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